26 of 29 people found the following review helpful
Argues that trust (or its absence) shapes economies.,
By A Customer
This review is from: Trust: The Social Virtues and the Creation of Prosperity (Hardcover)
The author divides societies into two classes: high trust and low trust. High-trust societies form volunteer and meritocratic organizations that expand in scope and efficiency to reach optimum economies of scale. These commercial and non-profit organizations (which are not dependent on family ties) create a network of efficiencies that benefit commerce, media communication and social change.
Low-trust societies, in contrast, rely on the extended family to build commercial, social and political networks. The trouble with the extended-family approach to economic development is that all families will soon run out of blood-line managerial, scientific, literary or artistic talent. The Latin Catholic and Chinese cultures are described as low-trust societies.
One conclusion to this analysis is that it is the lack of trust in society that forces developing countries to have large government organizations. In countries such as Mexico, the lack of trust in the players and in the notion of market efficiency itself leads to the creation and perpetuation of state monopolies.
The author wonders if trust in the American society is declining, to judge, at least, by the rising number of guarded residential compounds. The Clinton impeachment trial, from one lens, is about the threat to trust in public life. According to the model, if trust declines, so too will economic prosperity.